Hi everyone
in my journey of learning in the financial world I came across the concept of lombard loan, briefly explained here (look at the brochure):
https://www.credit-suisse.com/ch/en/unternehmen/kmugrossunternehmen/finanzierung/kredite/lombardkredit.htmlCould this be used similarly to the concept of HELOC as emergency fund proposed by MMM? Some of us are not home owner but renter so could this really be an option for a true emergency? Getting a credit by pledging securities? One of the option is really just a line of credit and you pay interest quarterly over the amount of credit used.
Is this used in the US? As anyone experience? I mean, you probably will only use it if the market crash and you are out of a job and some serious incident happen....the usual lombard loan rate I see today are 3-4%. I don't know if you lose the dividend of the pledged security, I think so but maybe someone can share some thoughts? Is still better then selling at the bottom....
Other than that, they quote tax optimization: is true that some debt, rightly used, can lower taxes, especially in Switzerland where we have a wealth tax.
This kind of provide a flexible solution for us not-home owner, but I'm not expert and maybe I understood it all wrong? Thanks for any feedback.
